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Jefferson City, Cole County revenue from proposed marijuana tax unclear

by Ryan Pivoney | March 15, 2023 at 4:03 a.m.

Voters participating in the April 4 municipal election will be asked to decide if Jefferson City and Cole County should tax the sale of recreational marijuana.

County and city officials said they would use the additional revenue to support law enforcement and address new challenges they expect to arise from legalizing marijuana for those 21 and older. But they don't have firm estimates for how much revenue to expect.

Missouri voters approved the sale, possession and use of recreational marijuana statewide in November through a constitutional amendment. Sales began in Jefferson City on Feb. 6.

Amendment 3 imposed a 6 percent state sales tax on recreational marijuana sales and allowed cities and counties to add an additional 3 percent sales tax each if approved by local voters.

Several municipalities in the state are posing the question to voters in the upcoming election, including Jefferson City and Cole County; Holts Summit, Fulton, Kingdom City and Callaway County; Columbia and Boone County; and numerous local governments around St. Louis and Kansas City.

A fiscal estimate published on the November ballot said the state could generate more than $40 million and local governments could generate at least $13.8 million from taxing recreational sales each year.

Jefferson City Attorney Ryan Moehlman said the city doesn't have an independent estimate for how much it expects to generate if voters were to approve the sales tax. An estimate provided to the Missouri Municipal League by cannabis industry representatives indicates municipalities could generate approximately $150,000 per store each year.

Jefferson City has two marijuana dispensaries, putting the revenue estimate at about $300,000 per year.

"We think that's probably pretty generous," Moehlman said.

He said the provided estimate was based on a statewide average of tax revenue from medical sales and an assumption that recreational marijuana sales will be fairly equivalent. Additionally, he said he expects sales to taper off as the excitement around legalization wears off.

Cole County Presiding Commissioner Sam Bushman said he has "no idea" how much revenue the additional sales tax could generate for the county.

"When we started talking about it and talking with our attorney, we thought well we will do it just because we're going to get something from it," he said.

County Auditor Mark Ruether said the commission never asked him to provide an estimate or study the issue to produce one, so he didn't.

The local taxes on recreational marijuana would be in addition to existing sales taxes. The state already collects a 10.225 percent tax on recreational sales. The county has a sales tax rate of 1.38 percent and the city has a sales tax rate of 3.25 percent within community improvement districts.

If voters approve each of the 3 percent April ballot measures, recreational marijuana in the Capital City would be taxed at a rate of approximately 20.85 percent.

The city and county won't start collecting taxes on recreational marijuana until October because of a state law, Moehlman said.

The local ballot questions don't designate generated tax revenue to anything in particular, unlike the statewide ballot question which designated tax revenue to processing expungements for past marijuana offenses, addiction treatment services and the Missouri Veterans Commission

Moehlman said city taxes will go to the city's general revenue fund to be appropriated by the Jefferson City Council. Council discussions have largely centered around spending the funds on law enforcement and challenges the city expects to encounter with legalization.

Bushman said county tax revenue would likely go toward law enforcement or the health department and Emergency Medical Services, but the commission hasn't talked about what to do with the funds.

"I know we are going to have some expenses incurred with that so we will use the money wisely," he said.

Jefferson City and Cole County aren't the only local governments working through these questions.

"By and large, most of the cities that have these types of facilities in their towns are putting the ballot measures in front of voters in April," Moehlman said, adding that many smaller communities without dispensaries may be skipping the question this election cycle.

Bushman recently attended a statewide training for county commissioners and said marijuana sales taxes didn't come up. He said he's unsure if smaller counties will "jump on the bandwagon or just kind of ignore it."

For more information on candidates, issues and races on the April 4 ballot, visit newstribune.com/election.


Print Headline: City, county revenue from proposed marijuana tax unclear

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